Utilities Sector

• Cikarang Listrindo (CL) has launched a roadshow to market a 144A/RegS senior unsecured notes offering of up to USD 350 mn.
• The proceeds will likely be used to refinance the company’s USD 500 mn 4.95% bonds due September 2026. We see fair value for the proposed notes at c.
• 150 bps above the relevant Treasury benchmark.

Perusahaan Listrik Negara (PLN) is a vertically integrated state-owned electricity utility responsible for generating, transmitting and distributing power in Indonesia. The company dominates Indonesia’s upstream power generation sector, and holds a monopolistic position in the country’s electricity transmission and distribution networks. It is the sole retail provider of electricity to end-consumers. PLN is 100% owned by the Indonesian government.

• We view Perusahaan Listrik Negara (PLN) as “Low Risk” on our LARA scale, primarily driven by the company’s strategic importance to Indonesia and SOE status (100% owned by the government).
• PLN controls a 62% share of Indonesia’s upstream power generation, and is also the country’s sole downstream electric utility.
• The company plays a critical role in ensuring affordable and reliable access to electricity for the population, as well as helping Indonesia transition to cleaner energy in the upstream sector (away from coal).

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Cikarang Listrindo
• In the US, January new home sales fell 10.5% m-o-m to a three-month low of 657 k annualised units (680 k e / 734 k p). The decline reflects weather conditions (as several regions experienced record snowfall in January), as well as affordability concerns amid high prices and mortgage rates. Separately, building permits fell 0.6% (-0.7% p) in the same month.
• Atlanta Fed President Raphael Bostic said the US central bank should hold interest rates where they are and retain a “restrictive posture”. He added: “You can say that we are hitting our employment mandate, and now we have to get the price stability mandate under control.”

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Pt Cikarang Listrindo Tbk
• New World Development

• Naturgy plans a €2.5 billion share buyback at €26.5 per share, thus increasing free float and liquidity, potentially aiding index inclusion and attracting passive ETF investors.
• The 2025-2027 strategic plan targets €6.4 billion investments, focusing on networks and renewables while maintaining EBITDA at €5.3 billion and net profit at €1.9 billion.
• A rising dividend from €1.6 to €1.9/share by 2027, with a 100% payout ratio, provides a 7.4% 27e yield, supported by a 2.3x net debt/EBITDA, ensuring sustainability.

• Adani Energy Solutions (ADANIT IN) Q3 FY25 shows 15% revenue growth to Rs. 6,000 crores, an 80% PAT increase, and aggressive capex investments, driven by robust transmission and smart metering initiatives.
• Strong financial performance, combined with increased capex and operational efficiency in transmission and smart metering, signals enhanced market positioning and long-term growth potential in a supportive energy sector.
• AESL significantly increases its capex ramp-up by around 3 times driven by unparallel project and operating excellence coupled with robust capital management program. 

• The emergence of DeepSeek, a Chinese artificial intelligence startup, has sent shockwaves across Wall Street, and energy companies are feeling the aftershocks.
• Vistra Energy suffered its worst single-day decline ever, plunging 28% on January 29, 2025, shedding a staggering $18.4 billion in market value.
• Constellation Energy (NASDAQ: CEG) also nosedived by 21%, erasing $22.8 billion in capitalization.

• Diplomatic tensions hinder acquisition: Algeria opposes Taqa’s takeover of Naturgy due to geopolitical conflicts with the UAE, complicating Spain’s energy security and disrupting acquisition negotiations.
• Corporate governance challenges: Naturgy faces board restructuring, with five seats up for renewal and shareholder disputes over representation, potentially impacting governance stability and strategic decision-making.
• Despite acquisition uncertainties, Naturgy is expected to report solid 2024 financial results and unveil a strategic plan focusing on decarbonization, diversification, and operational efficiency in early 2025.

• Barito Renewables Energy (BREN IJ) stock has gone through a series of gyrations as index inclusion was announced and then retracted due to the concentrated holding of the stock.
• With pre-IPO PE/VC investors selling some stock, the increase in float could result in the inclusion of Barito Renewables Energy (BREN IJ) in a global index later this month.
• The inclusion of the stock in the index will require passive trackers to buy just over 400m shares of the stock. That is over 14x ADV and will be impactful.

• Back on the 27 December, Shandong Hi-Speed Holdings (412 HK) completed two SPAs, elevating its stake in Shandong Hi-Speed New Energy (1250 HK) to 56.97% from 43.45%, triggering an unconditional MGO. 
• The Composite Doc is now out, and the Offer is open for tendering. The close of the Offer is the 18th Feb, 21 days out. Don’t expect an extension.
• The IFA has declared the terms fair & reasonable. Which is probably true.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Adani Energy Solutions, China Water Affairs, Anton Oilfield, Tata Steel, China Vanke
• In the US, December 2024 new-home sales rose 3.6% m-o-m (1.7% e / 9.6% revised p) to an annualised 698 k units. Full-year newhome sales were up 2.5% y-o-y at 683 k units, with the median sale price rising 2.1% to USD 427 k.
• Treasuries rallied on haven demand amid a sell-off in equities, as well as on the back of a strong 5Y notes auction. The yield on the 2Y UST declined 7 bps to 4.20%, while the yield on the 10Y UST fell 9 bps to 4.54%.